Banks and building societies should be stripped of the "unfettered power"
to decide the future of cheques, MPs have said.

In a report published on Wednesday, MPs on the Treasury select committee also said banks should write to all customers stating that cheques will continue to be honoured "for the foreseeable future". They added that banks and building societies should consider reintroducing the cheque guarantee card.

The news comes weeks after the Payments Council was forced into an embarrassing about-turn when it scrapped plans to axe cheques from October 2018.

The MPs said: "Of the independent members of the board, only one has a consumer background.

"Consumers are entitled to be suspicious of the motives of a body with such a composition proposing measures that are in the financial interests of its members."

Andrew Tyrie MP, the committee's chairman, said: "Cheques have been saved, for the moment, but we need to remain vigilant. The incentives for the industry to get rid of cheques has not gone away.

"The Payments Council is an industry-dominated body with no effective public accountability.

"It should not have unfettered power to take decisions on matters, such as the future of cheques, or other issues, that are of vital importance to millions of people."

The MPs said the Treasury should look at whether to enshrine in the new Financial Services Bill the right of the Financial Conduct Authority "to intervene to protect bank customers by preventing cheques being withdrawn".

Mark Hoban MP, Financial Secretary to the Treasury, said: "The way they handled this decision does raise questions about the governance of the Payments Council."

Gary Hocking, chief executive of the Payments Council, said that "whilst we don't believe increase regulation is required" it would review its "governance arrangements before the end of the year". He added that the industry would "ensure that we have plans in place to continue to process cheques efficiently and securely despite falling numbers".

Further research on the impact of the axing of the cheque guarantee scheme was being undertaken, and would be published.

Meanwhile, banks are closing their branches at a rate of three a week, leaving vulnerable customers without access to their cash. Figures from the British Bankers' Association showed that 187 branches owned by Santander, Barclays, HBOS, Royal Bank of Scotland and Natwest closed last year

Derek French, Campaign for Community Banking Services director, said that the banks were not listening to local campaigns. "However good the arguments against closure and the quality of the local campaign to retain their bank the answer is still no," he said.